Carbon On Invoice Letter Number 3

22 February 2023

(The letter from the Carbon On Invoice collective)

Carbone On Invoice or COI is an open collective of men and women, entrepreneurs, associations, computer scientists, academics, civil servants, accountants, elected officials, financiers…

The objective: to easily and quickly associate the real carbon weight to each of the hundreds of millions of products and services that we exchange on a continuous basis. The condition for a general mobilisation to decarbonise the planet.

COI is building a counting protocol and free tools that allow an organisation to easily calculate the carbon weight of its products or services based on

    • The good collaborative practice of indicating “its carbons on its invoices”: the weight of the product next to its price
    • The integration of counting into a continuous accounting process that ensures that a supplier’s outgoing carbons are its customer’s incoming carbons, and the balance of incoming and outgoing carbons for each.

The draft counting protocol has been online since 2 January and continuously improved through discussions. This letter illustrates how it clarifies a lot by distinguishing between real carbons and financial carbons, based on a new scandal that has just hit the carbon finance industry.

A consortium of journalists (from the Guardian, Die Zeit and SourceMaterial) has just revealed that more than 90% of the carbon credits certified by one of the world’s leading private “green” standards will have no impact on carbon emissions, contrary to their claims. There are unfortunately many fakers in green finance and this is dramatic for the collective goal of decarbonisation.


The heart of the matter: better carbon counting

Rather than denouncing the forgers, our Carbon On Invoice (COI) initiative looks at the reason for this fraud. Our work confirms that the first reason is the vagueness of the current carbon counting rules: a counting system that is sometimes called “carbon accounting” but which has nothing whatsoever to do with accounting at the moment. Mobilisation for decarbonation is impossible without simple good practices on how to count carbons.


Real carbons and financial carbons


    • A kilo of real carbon measures the carbon weight of a product or service: if I am a consultancy firm, the weight of my day’s consultancy in real carbon will include the weight of the real carbon of heating my offices, travelling to my client’s premises, my computer, etc. It is this weight that will allow me to work on my climate competitiveness and that will help my client (if I pass on the weight on my invoice) to improve his.
    • A financial carbon is also counted in kg of CO2 equivalent but it measures something very different: the carbon performance of a financial instrument (a share, a credit), that is to say its level of risk and its result in decarbonisation.

As a buyer, I want the real carbon weights of the service offered, and therefore, good practice number 1 is : do not distort the real weights of products and services by financial carbons.
As a saver or investor, I also want the risk and return of my investment measured in financial carbons and the protocol will have to say how to count them.


When financial carbons mask real carbons

Let’s return to the scandal of carbon credits (sometimes called “voluntary” or “grey” to distinguish them from regulated carbon credits). An invention of green finance, they accounted for more than $60 billion in emissions last year. A carbon credit is a financial carbon. A large company, such as Google, pays for the maintenance of a forest. This maintenance is supposed to improve the carbon capture of the forest by a certain amount. These (real) carbons benefit the forest owner when he counts the (real) carbons of the wood he sells. They will also be attributed as (financial) carbons to Google as “recognition” of its maintenance support. In the current blurring of the counting rules, Google is reducing the (real) carbon weight of its data centres by these (financial) carbons. ssuming that the capture improvement is real (the reason for the scandal) the controversy rages on as to whether this offset is permissible at the Google level (basically, the UN is against it, the carbon credit ‘makers’ are for it). But one thing is certain: these financial carbons must not obscure the real ones. the real weight of Google’s IT hosting is higher than that of a competitor’s hosting, customers need to know this. “Offsetting” carbon credits at the product or service level violates good practice number 1, it distorts the real carbon weights.